Infection with hepatitis B virus (HBV) is a major cause of liver disease worldwide. Hepatitis induced by hepatitis B virus infection is a complex and intricate process involving interactions of multiple host factors with the virus and/or the viral gene products. The HBV X (HBX) gene plays a crucial role in the life cycle and oncogenic potential of HBV. Since virus-host interactions are central to the pathogenesis of viral infection and host injury, this project aims to elucidate the cellular and molecular mechanisms of HBX-host interactions during HBV infection. Using the yeast two-hybrid system we identified that HBX interacts with two subunits of the 26S proteasome. The 26S proteasome complex is the predominant cellular factor which degrades cellular proteins in both ubiquitin-dependent and -independent pathways. It has been implicated in the regulation of a variety of transcriptional and cell cycle factors, cellular stress response, and antigen presentation. We further demonstrated an association in vivo of HBX with the 26S proteasome complex by co-immunoprecipitation and co-localization upon sucrose gradient centrifugation. Expression of HBX in HepG2 cells caused a substantial decrease in the proteasome's chymotrypsin- and trypsin- like activities and in hydrolysis of ubiquitinated lysozyme. A marked increase in HBX level was observed in cells treated with specific proteasome inhibitors. These agents inhibited HBX's degradation and caused its accumulation in polyubiquitinated form. HBX functions as an inhibitor of proteasome, and its level is low in vivo due to rapid proteolysis by the ubiquitin-proteasome pathway. Surprisingly, the proteasome inhibitors blocked the transactivation by HBX and this effect was not a result of a "squelching" phenomenon due to HBX accumulation. Thus, proteasome function is somehow required for the transactivation function of HBX. To further study the effects of HBX in vivo, we studied HBX transgenic mouse model which uses the mouse major urinary protein (MUP) promoter to express HBX in a liver-specific and developmentally regulated manner, i.e. post-partum. Proteasomes were purified from livers of HBX mice and wild-type littermates at various ages and analyzed for their proteolytic activities. The results showed that at an age as early as one week, the proteasome activities were significantly inhibited up to 40% in HBX transgenic mice. Similar to our tissue culture studies, both 20S and 26S activities were affected. Interestingly, the inhibition of proteasome activities by HBX gradually disappeared in older mice, suggesting an adaptive response of the mice to the effect of HBX on proteasome in vivo. The inhibition of proteasome function by HBX may account for the multiple actions of HBX and may be an important feature of HBX infection, possibly in helping stabilize viral gene products and suppressing antigen presentation. Our laboratory is also conducting experiments to study the biological significance of this interaction in the woodchuck model. Finally, experiments are under way to develop compounds designed to interfere with HBX-proteasome interaction as a novel antiviral approach.